Strong air freight demand expected to continue

Even as England enters a four-week lockdown and the rest of the UK operate under strict restrictions, consumer activity will continue to be strong, driving further air freight demand.

Air freight rates from China continue to rise, as the peak season continues and distressed sea freight is increasingly diverted to the mode, exacerbated by blanked sailings and falling schedule reliability.

Carriers appear to be pulling scheduled passenger flights again and this will further impact the capacity situation, although some PAX carriers are introducing new preighters on selected routes.

Rates from China to the EU and US continue to track at a higher level, as a result of stronger load factors and rate increases are not really surprising, as the industry is heading into the peak season. 

However, with different market dynamics in play this year, rate progression and capacity availability has been harder to predict.

With goods continuing to be sold through stores that remain open and online channels, for ‘non-essential’  there will be demand – increased demand for some product lines from the region – which means that supply chain flows continue unabated for air and sea freight.

Heavy discounting by retailers and fashion brands is encouraging consumers to refresh their wardrobes, with air capacity from key sourcing country Bangladesh, extremely tight, with carriers holding back space for lucrative last-minute spot buying.

We expect the Bangladeshi market to remain at these levels through November and probably well into December, especially if we see the expected surge in e-commerce volumes.

Bangladeshi exports have been hard-hit by technical problems at Dhaka Airport through broken scanning machines, causing “massive air shipment problems”.

The air peak season has been exacerbated not just by the limited capacity, but also with a return to PPE shipments, as well as hi-tech launches such as the Playstation 5, which launches globally this month.

The impact of e-commerce volumes has not been sufficiently factored in by many in the industry, with online product flows congesting the market. 

As the biggest e-commerce product flows tend to be handled by integrators and specialist fulfilment providers, rather than forwarders, their volumes are not considered as reducing supply with airlines. And this will get worse as we run up to Christmas festivities and more people are shopping online globally. It will be crunch time right up to Christmas.

Strong air freight demand, versus tight capacity, drives up rates and with  new product launches and congestion at all major hub points, more or less the entire market will become spot rate driven.

Metro are doing everything we can to overcome turbulent capacity issues with airlines withdrawing flights dependent on revenue streams at the last moment and price flight specific increases by developing and offering alternative services and multimodal services. 

We work closely with the world’s largest cargo airlines to offer consistent and reliable transits at competitive rates. 

If you have any questions regarding these developments or would like further information, updates, or the latest market pricing please contact Chris Carlile or Grant Liddell.